Conditions to be met by the Social Enterprise

There are a number of conditions to be met by the Enterprise, including:

a limit on the amount raised from qualifying investments, calculated by a formula which reduces the limit by the amount of ‘de minimis aid’ received as defined under EU regulations

a gross assets test: the value of the gross assets of the Enterprise or its group must not exceed £15m before and £16m after the investment

it must have unquoted status

it must have fewer than 500 employees

any property owning /managing company within the group must be a 90% social subsidiary.

Importantly, the social enterprise must also meet a trading requirement – if it is not a charity, it (or its group) must exist wholly or mainly for the purpose of carrying on one or more qualifying trades. This condition appears to exclude non-charitable housing providers from qualifying. Property development is specifically excluded from being a qualifying trade The monies raised must be used for the purposes of the qualifying trade within 28 months.

The Enterprise is responsible for applying to HMRC for confirmation that the investment qualifies. It will then be able to issue a Compliance Certificate to investors to enable them to make personal tax claims.